Question

Lester is concerned about a stock in his portfolio because the dividend he just received exceeded the company's earnings per share for the same period.
What financial metric is Lester analyzing?
a.) Dividend per share
b.) Payout ratio
c.) Dividend yield
d.) Dividend cover

Answer 1

Answer:

D

Explanation:

The dividend payout ratio is the ratio of dividends paid to shareholders in proportion to net income

Payout ratio = dividends / net income

Dividend per share is the amount paid to shareholders for each share owned.

Dividend yield = earning per share / price per share

Dividend cover = net income / dividends per share

Answer 2

Answer:

Payout Ratio

Explanation:

Payout ratio is calculated by dividing the company’s dividend by the earnings per share. A payout ratio greater than 1 means the company is paying out more in dividends for the year than it earned, while a low payout ratio indicates that the company is retaining a greater proportion of their earnings instead of paying out dividends.